Many of the creditors “are hedge funds that purchased Puerto Rican debt at a discount, after the debt crisis began, angling for a windfall.” The biggest debt, at $12 billion, is owed to Puerto Rico’s own Banco Popular, which issued the bonds that have been funding the island’s day-to-day operations.

Government workers will forgo pension money, public health and infrastructure projects will go wanting, and the “brain drain” the island has been suffering as professionals move to the mainland could intensify…The governor’s fiscal plan also calls for shifting all current government workers from pensions into 401(k)-style retirement plans. Current retirees will continue to receive their traditional monthly pensions, but the amounts are to be reduced by about 10 percent on average.

The upcoming court proceeding for Puerto Rico will not formally be called a bankruptcy. Instead, it is seeking relief under Title III of the PROMESA (Puerto Rico Oversight, Management and Economic Stability Act) law signed by Obama to prevent a humanitarian crisis.

Puerto Rico currently has a total of 1,292 public schools that serve 365,000 students. The island has seen its school enrollment drop 42 percent in the past three decades, and an additional 22 percent drop is expected in upcoming years, according to a report that the Boston Consulting Group submitted to the previous administration to help restructure Puerto Rico’s education system.

Much of the drop was the result of parents moving to the mainland U.S. in search of jobs and a more affordable life, as well as thousands of teachers being recruited from the island for their bilingual skills.

Still, this “predicament may turn out to be a cautionary tale for bond holders of other troubled states and cities. Puerto Rico’s case could show public workers and retirees that seemingly inviolate pension systems can be changed, too.”

Last Friday, “U.S. District Judge Laura Taylor Swain from Southern District of New York was designated as the presiding judge in Puerto Rico’s bankruptcy-like case.” The oversight board will negotiate debt cuts with creditors and propose a plan of adjustment. The judge will decide whether to authorize the plan.

In the midst of this economic crisis, Puerto Rico’s long-standing status question is once again under consideration. Newly elected Governor Rosselló promised a referendum on statehood, and a recent poll showed 57 percent support.

[F]rom Puerto Rico’s perspective, the arguments against statehood are getting weaker. Traditionally, its opponents have said that Puerto Ricans have the best of both worlds: they use the dollar, get American passports, but keep Washington at arm’s length. With the oversight board in place, that claim looks a lot less convincing.

Cyndi Suarez is a Senior Editor at NPQ. She is the author of "The Power Manual: How to Master Complex Power Dynamics," in which she outlines a new theory and practice of power. She has worked as a strategy and innovation consultant with a focus on networks and platforms for social movements. She studied Feminist Theory and organizational development for social change.